As bankers lose confidence in the link between their performance and their pay, their attention turns to work-life balance instead.

Banking is a stressful business at the best of times, but the current crisis has ground on and the sector's workers are showing severe signs of strain. In other downturns there was always the sense that they would not last too long, so if you survived the initial pain, you could dig in and wait it out, confident that at some point things would bounce back.

This time round, the uncertainty is dragging on a lot longer and even now the future is pretty opaque. Redundancy rounds have left many bankers shell-shocked and anxiety about job security remains high. The vilification of the sector by the media only adds to the pressure. And on a day-to-day basis, of course, the job itself has changed. Headcount reductions have resulted in the majority of people having to take on more work outside their normal remit, and this inevitably translates into more hours.

So it is not surprising that nearly three quarters of bank workers think that the financial crisis has increased stress levels at work, as the annual survey of UK-based bankers from recruitment consultant firm Michael Page found. At some stage this will reach a tipping point where people decide enough is enough.

At Michael Page, we regularly analyse jobseekers' reasons for making a move and over the past two years, the quest for better work-life balance has transformed from 'nice to have', into one of the main motivators. In our annual survey of bank workers' outlooks, this reason ranked number one, for the first time ever, for jobseekers in senior management posts – a dramatic and poignant statement.

With fewer opportunities for promotion around, clearly part of the new outlook is simply pragmatic – career advancement is not an option.

Unrewarded performance

But the other big shift has been around pay and reward. Bankers know that pressure, stress, long hours and so on come with the territory. But the traditional quid pro quo – money – is receding and without that, the balance is upset.

Our research shows that the majority (more than 60%) of bank employees working in the sector now lack belief that their bonus is linked to their individual performance, and believe it is instead just going to reflect corporate performance. When profits are battered by losses in other divisions, mammoth fines from the regulators, rogue traders, or simply strategies that have not worked out, it is very disheartening.

And in their stressful environment where 65% of people work up to 30 hours longer per week than they are contracted to, the disconnect is having a profoundly negative impact on finance professionals' loyalty to their employer.

Employees are very clear that if they are to gain long-term financial improvements, moving jobs is the best way to do that. Loyalty to their employer will not be repaid – our research found that only 8% of employees believe that long-term incentive plans in their own firm are going to work for them and nearly half of all employees think it is important to plan career moves to other companies.

Handling high turnover

There are many obvious reasons why the resulting staff turnover is bad for the banking business, and for the sector as a whole. The response from many firms has been to increase the focus on engagement and retention strategies, such as internal talent management programmes, and that is a very positive development, particularly for the high flyers, but what else can banks do? Bank chiefs need to restore faith in the link between pay and performance, but clearly the climate at the moment makes that a very difficult task.

And it is of course particularly difficult in those firms that are under the greatest scrutiny from the media, the politicians and in turn, the public. These companies need to pay up to retain their talent, but that is a complicated message to get across.

Some bank chief executives try taking a placatory line by declaring that bankers are indeed paid too much, but no matter what the public relations wins are, these CEOs are shooting themselves in the foot as far as staff retention is concerned.

Studies comparing the past six decades show that employees today are just generally unhappier with their hours and more stressed, even though hours are actually shorter than they used to be. But in the banking sector right now, this translates into action, and high turnover is costly.

There is a strong element of cyclicality to this, of course. As and when employees feel more optimistic about economic conditions, they will start to make assumptions about improving compensation. And in turn the spotlight on work-life balance may fade, and turnover may decline. The burning question for many companies will be what damage is done in the meantime – it might be terminal for some.

David Leithead is a managing director of the banking and financial services division of recruitment consultant Michael Page.

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